Which Is A Better Investment Option? Fixed Deposits Or Savings Account?

Which Is A Better Investment Option? Fixed Deposits Or Savings Account?

Savings is a habit that has been inculcated in us right from our childhood. As every drop in the ocean counts, every penny we save can make a huge difference. In case if you are stuck in a financial emergency, savings can be used as a backup. But it is not always that savings are preferred, many people also prefer to invest as it gives higher returns.

Though savings is a traditional way to save funds for the future, some people still believe in investing. These days, investing funds in Fixed Deposits has become one of the most popular options. As investments help you to replicate funds, you will earn higher returns, which is why investments are the more preferred than savings.

While talking about investing, people usually opt for Fixed Deposit investments as it is a safe investment option. Fixed Deposit is considered as a safe investment option as it does not depend upon the market conditions. Though Fixed Deposits offer a high-interest rate, the amount of interest that you earn does not change over time. As the market rate keeps on fluctuating, investments which depend upon these market rates usually tend to change over time. So, compared to other investments, Fixed Deposit is considered as a less risky choice.

As the Reserve Bank of India (RBI) has cut down the repo rates, which has initially lowered the interest rate on Fixed Deposits, many new investors are posed with a question whether to invest in Fixed Deposits or not.

Though this is the situation with Fixed Deposits, many banks have increased the rate of interest offered on a Savings account. The rate of interest offered by these banks on their Savings account is almost similar to Fixed Deposits, which has confused people whether to invest their funds or to save it. Generally, the banks offer around 4% of interest over Savings account, whereas, some banks have increased their interest rates up to 6%-7%.

As the interest rates on Savings account have been increased, many people are confused about investing their funds and keeping the funds in a Savings account. But in case, you want to earn higher returns, then putting your funds in a Savings account is not an option for you. Investing in a Non-Banking Financial Company (NBFC) can help you earn higher returns on your investment as compared to the banks Fixed Deposit. NBFCs offer a higher rate of interest on Fixed Deposit as compared to the interest rates offered on a Savings account.

Investing in fixed deposit will be beneficial if you are a senior citizen. The interest offered to a senior citizen by the financial institutions will be high as compared to other Fixed Deposit accounts. As investing in senior citizen Fixed Deposit helps you earn higher returns, investing your money will always be ideal than saving it. Thus, in such a situation, investing your funds will prove to be more beneficial than saving your funds.

Investing your funds will always help you in replicating your funds and will also help you earn a higher profit over it with ease. If you are planning to invest in a higher interest Savings account, the interest that you earn will always be lower than NBFCs Fixed Deposit.